Know your vehicle cost-of-ownership

Posted March 26th, 2010 by admin and filed in Maintenance Tip of the Month, Mileage Tips

Thomas J. Stanley noted in his book The Millionaire Next Door: The Surprising Secrets of America’s Wealthy a group he called the “used car prone” who would routinely by three- to five-year-old used cars and drive them into very high mileage. The rich who did this had some of the highest net-worths he found.

This begs the question, Why do those who can drive anything opt for a quality used car and drive it a long time? My belief is two-fold: 1.) They won’t waste their money in new-car drive-off depreciation; and 2.) These people generally didn’t get rich buying a lottery ticket. They either inherited their riches or worked very hard for it and are unlikely to risk or waste it on depreciating assets like routine transportation. One caveat to this is these same uber-rich have disposable income and collect antique or rare cars which hold, and actually appreciate, in value. 

So back to reality for the rest of us… The American Automobile Association provides excellent formulas for determining true cost-of-ownership. These are worthwhile calculations to run in the preliminary stewardship of making a vehicle purchasing decision. This is also valuable information to know in advance of determining if it is more cost effective for you to fly or drive on a trip.

To be accurate everything must be accounted for in discovering the costs to operate your vehicle. Included in this are any loan payments, fuel costs, maintenance costs (including all service parts and labor, tire replacement, cleaning, etc.), insurance and anything else vehicle related. Knowing these data points will allow you to determine true cost-of-ownership over a time period. Then divide the cost over time by the mileage driven during that same time and your result is the cost-per-mile operating figure. This figure is the baseline amount for all other sums you will determine. This is also vital for trip estimating (flying versus driving). By having the baseline cost-per-mile you can then determine what it cost you to drive anywhere.

Each vehicle will be different. New car manufacturers include estimated cost-of-ownership on the window sticker. They generally are only based on the manufacturer’s suggested retail price and may not be completely inclusive of all costs. 

In the case of vehicle ownership and operation, ignorance is not bliss. No one can manage what they cannot measure. This is why using a reputable and certified vehicle maintenance center like Terry Wynter Auto is important. We always provide you with comprehensive estimates before work begins and a detailed invoice with a thorough explanation when the work is completed. With the Terry Wynter Team’s attention to detail, you can be an informed consumer and begin to leverage your new found knowledge to be as smart as that millionaire next door.

Call us at 239-939-2500 or e-mail us for your next service appointment.